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Jean-Yves Gilg

Editor, Solicitors Journal

Managing change in difficult times

Managing change in difficult times


The credit crunch means that to remain profitable law firms must take some hard decisions becoming proactive rather than reactive, says Peter Morgan

Change is continuous and managing change will be the key to success as the chances of a British recession, the likes of which many commentators believe will be the worst for a generation, increase month-on-month. These two basic facts will be the common denominators for all successful businesses that prosper between now and the end of the economic downturn, whenever that may be. But how can these factors be applied to law firms struggling to survive the carnage that looms? I write from my own experiences as managing partner of a five-partner, two-office provincial niche practice in the South East which has, throughout the past 25 years, been compelled to manage change to continue to survive and thrive.

Start from the top

In managing change in a legal practice in current times there are a number of basic principles which must be adhered to if any degree of success, by which I mean a net profitability to satisfy the financial requirements of all the equity partners is to be achieved.

To begin with, however, one has to understand the meaning of 'change'. Change in the Oxford Concise Dictionary is defined as 'the act of making or becoming different'. In business, change means learning new skills, new procedures and adding value to your existing core business thereby making more out of what you already have.

First, change starts at the top and by example. I have long held the view that all lawyers must accept that throughout their career, from the date of their admission, they must be prepared to retrain at least two or three times to meet the inevitable changes that will occur in their professional life. This has never been more true than today when, as I will illustrate below, survival and success will only be achieved by those lawyers who identify the necessity for change and make it happen by retraining within the existing partnership structure and not waiting for the world outside to change back to how it was in days gone by. 'Those were the days, my friend' and they will not return!

Secondly, communication of the need for change has to be transmitted to your most vital assets '“ your staff. This is a direct consequence of the first principle. If you lead by example and communicate that lead to your staff, not only will they know what you are doing, but how you are integrating them within the management of change and how they will profit from helping you to manage that change.

They will know if you prosper, they too will prosper, and this has to be a great motivation to your staff as you will all share in that success. It is therefore incumbent upon you to be entirely open with your staff, and indeed both Lexcel Practice Management Standards and Community Legal Service specification now seek to impose a much-needed compulsion upon firms to train and continually appraise their human resources.

Thirdly, specialisation has to be the way forward. I have never advocated any business having all its eggs in one basket and I do not do so now. However, I really do believe that there is a very strong argument for limiting to a substantial degree the number of baskets into which you place your eggs. Historically the provincial solicitor has always been regarded as a man of affairs who can turn his hand to any problem that his client presents to him irrespective of complexity or nature.

Identify 'baskets' of work

As a consequence of being perceived as a jack of all trades and, in most cases, if we are honest with ourselves, erroneously a master of all trades, we have undertaken work that in many cases is not as profitable as it should have been. Why? We do not, as a profession, like to say 'no' to our clients, and as a direct consequence we undertake work alien to our core business, whatever that may be. We therefore spend more time endeavouring to attain knowledge of a particular aspect of the law which is not within our own experience and in all honesty should not be touched by us with a bargepole. In doing so we incur more time than we can reasonably charge and run the risk in these litigious times of not handling the file as carefully and efficiently as a specialist would have done.

We must, therefore, be able to identify these 'baskets' of work that we cannot service as we would wish and that are not as profitable as our core business and make an irrevocable decision to no longer undertake those types of work.

I believe that practices must now be honest with themselves and identify what may have traditionally have been their core business and accept, if it is the case, that these types of work are no longer profitable and cease completely to offer that service or those services to their clients. Criminal law and volume 'paid for' domestic conveyancing immediately spring to mind.

Fourthly, and this is an indirect consequence of the preceding principle, you must seek to add value to your existing services by way of diversification. This is not, as it may initially appear, a contradiction of principles. In identifying those aspects of your practice that are no longer profitable you can embark upon retraining those partners and staff within the redundant department(s) to learn new skills to add value by way of diversification to your core business. From my firm's experiences, wealth management and inheritance tax planning, portfolio management, estate agency, Court of Protection and financial services all have a part to play in a provincial law firm's successful management of change, as well as the obvious sectors such as specialist personal injury work and employment law.

Cross-sell across departments

Diversification has traditionally been the key to success of corporate businesses. It is not about flying off at a tangent and trying something completely different '“ it is taking a stepping stone out from one's base. To do this you have to identify areas where you believe your existing strengths will give you the potential to diversify successfully. The ability to cross-sell across the various departments of your practice is not as easy in practice as the theory would lead us to believe. Residential and commercial conveyancing, wills and probate, divorce, personal injury '“ all those departments have the strengths of existing clients who may need advice that traditionally has not been the remit of lawyers. I take the view that any successful provincial practice must now seek to identify new disciplines not necessarily regarded as 'legal' work in the true sense of the word and seek to integrate such disciplines within their organisation. Estate agency and wealth/financial management are two obvious examples.

Fifthly, being proactive and not reactive must be the final principle to be invoked. Once again without apology I labour the dictionary definitions. Proactive is defined as 'creating or controlling a situation by taking the initiative'. Conversely, reaction is 'a responsive action '“ a tendency to oppose change'.

Too many times in the past I have seen practices react inadequately on a regular basis to a worsening situation that does not abate quite simply because reaction is akin to shutting the gate after the horse has bolted. In many instances proaction can be seen to be overreaction, but in these economically difficult times it is plain to see that those companies that appear to overact by closing offices and shutting down whole departments are, in fact, taking the initiative by creating a situation to facilitate managing change successfully by getting ahead of the consequences of recession and proactively controlling their destiny.

A substantial reduction in expenditure that is in any way surplus to requirements must be actioned sooner rather than later because there is no doubt in my mind that while not a principal to success, a key to that success which should follow from adoption of the principle of proaction is the reduction of the primary outgoings of staff, rent and rates. Reduction in overheads as a proportion of turnover and, in particular, departmental staff as a percentage of turnover is one of the key ratios in managing change successfully.

Furthermore it is that key ratio that must be addressed sooner rather than later. To do so it is necessary to evaluate the strengths and weaknesses of your individual staff members by way of formal and documented appraisals and to embark upon a defined strategy of implementation of information technology with a particular emphasis upon digital dictation, client databases, bespoke software support, time recording and online marketing initiatives. All of these matters are crucial to change being managed economically and efficiently and are of themselves worthy of special consideration individually as a means to an end.

Think and plan ahead

In conclusion, my view is that the most successful practices will be those that think and plan ahead, establishing a clear strategy for change, and then managing that change to ensure success. I believe the implementation of the principles outlined above will provide a strong foundation for managing change.

However, it will not be easy and as I have tried to demonstrate it requires discipline within the whole organisation to work together to succeed.

The entire environment of our workplace may have to change, but it is vital to remember that the implementation of the principles will be for the benefit of the partners and employees alike and that change will therefore be worthwhile for all concerned. Managing that change successfully in economically challenging times will be key to achieving a profitable legal practice and the principles referred to above are paramount if that change is to succeed.